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Before:
MR JUSTICE EDWARDS-STUART
____________________
Between:
WALTER LILLY & CO LIMITED
- and JEAN FRANCOIS CLIN
Claimant
Defendant
____________________
Mr Sean Brannigan QC (instructed by Pinsent Masons LLP) for the Claimant
Mr Vincent Moran QC (instructed by DLA Piper) for the Defendant
Hearing date: 19th January 2016
____________________
HTML VERSION OF JUDGMENT
Crown Copyright
Insert Judge title and name here :
1
On 25 September 2012, the parties entered into a JCT Building Contract with
Quantities, 2005 Edn, incorporating Revision 2 (2009), with Contractor's Designed
Portion incorporating bespoke amendments ("the Contract"). Under the terms of the
Contract, Walter Lilly was to carry out demolition, refurbishment and reconstruction
works at the Property to form a single residence.
1
On 17 July 2013, whilst the works were underway, RBKC wrote to Walter Lilly and
Mr Clin's Architect stating that it considered the extent of proposed demolition to
amount to "substantial demolition" under section 74 of the Planning (Listed
Building and Conservation Areas) Act 1990 and that as a result, conservation area
consent was required. Accordingly, the critical demolition works were suspended by
Walter Lilly following receipt of that letter. They were not resumed until about a year
later. Walter Lilly claims an extension of time in respect of this delay.
Mr Clin and those representing him, which, according to Walter Lilly, included an
architect, city solicitors, a specialist planning consultant and leading and junior
specialist planning counsel, then engaged in vigorous correspondence with RBKC
asserting that RBKC's position was incorrect and unjustified and that conservation
area consent was not required on the basis that Works did not involve "substantial
demolition".
Eventually, Mr Clin and his professional team decided to revise the design of the
development with a view to, amongst other things, carrying out reduced demolition
work (according to Walter Lilly's case), and so a further planning application was
submitted on 19 December 2013. Planning permission was eventually granted in June
2014.
At the hearing Walter Lilly was represented by Mr Sean Brannigan QC, instructed by
Pinsent Masons LLP, and Mr Clin was represented by Mr Vincent Moran QC,
instructed by DLA Piper UK LLP.
The preliminary issues
These were settled by an order of the court made on 18 December 2015. They are as
follows:
1. Did RBKC's communication in its letter dated 17 July 2013:
1.1 mean that it required conservation area consent for the Works then
ongoing to be obtained before it would allow those works to continue;
and
1.2 amount to a requirement of a local authority or competent authority
to halt the works within the meaning of the definition of "Requisite
Consents" and/or "Statutory Requirements" set out at Clause 1.1 of
the Building Contract?
2
2. If so, was Walter Lilly obliged and/or entitled pursuant to clause 2.1.1
and/or clause 2.3.7 of the Building Contract to halt the relevant works until
either that consent had been obtained, or RBKC changed what it required?
3. If so did that obligation to halt the Works amount to:
3.1 an alteration or modification to the design, quality or quantity of
the Works in accordance with clause 5.1.1 of the Building contract?
And/or
3.2 the imposition by the Employer of any obligations or restriction in
regard to (i) access to the site or use any specific parts of the site, (ii)
limitations of working spaces, (iii) limitation of working hours or (iv)
the execution of the work in any specific order in accordance with
clause 5.1.2 of the Building Contract?
4. As between Walter Lilly and Mr Clin, did the risk and responsibility for
ensuring that all planning consents in fact required by RBKC (whether
lawfully necessary or not) were applied for and obtained prior to the Works
being carried out lie solely with Mr Clin?
5. Was there an express or implied term of the Building Contract to the effect
that Mr Clin was obliged:
5.1 to ensure that:
5.1.1 the Works had the required planning consents,
including any consent subsequently required by RBKC
(whether lawfully necessary or not) in relation to the proposed
demolition works? And/or
5.1.2 RBKC was satisfied that all necessary consents and
approvals for the Works (whether lawfully necessary or not)
had been obtained prior to their commencement?
Or
5.2 Only to take due diligence (or, alternatively, reasonable skill and
care) to obtain the planning consents necessary for the lawful
completion of the Works?
6. Was Mr Clin obliged under the Building Contract:
6.1 prior to the Works commencing, to ensure that RBKC was satisfied
that all necessary consents and approvals for the works had been
obtained? And/or
6.2 following receipt of the 17 July Letter, to make a prompt and
compliant application for the necessary conservation area consent
(prior to 1 October 2013) and/or planning consent (post 1 October
2013)? And/or
6.3 to apply to RBKC for a Lawful Development Certificate and, if
such a certificate was not granted, to seek to appeal that decision
and/or their failure to apply for declaratory relief?
7. Note: The Claimant may apply to reinstate paragraph 3.3 of its proposed
Preliminary Issues at the Hearing of 19 January 2016, provided that notice of
such application is given not later than 7 days before the Hearing."
3
Walter Lilly did give notice 7 days before the hearing to reinstate paragraph 3.3 in
accordance with paragraph 7 above. That application was opposed.
The terms of the contract
I set out below the terms of the contract principally relied on by the parties but, for
ease of reference, I have retained the emphasis added by Mr Moran.
The Ninth Recital to the Contract provided that the works included, amongst other
things, the design and construction of "shoring/facade retention" and "Temporary
support works". The work described in the Ninth Recital was defined as "the
Contractor's Designed Portion". The Tenth Recital stated that the Employer had
supplied the Contractor with documents showing and describing his requirements for
the Contractor's Designed Portion ("the Employers Requirements").
By clause 2A.1:
"Upon execution of this Contract and for the consideration mentioned in
clause 2A.5 the Contractor will collaborate with the Consultant Team and shall
commence the Pre-Construction Period and carry out and complete the PreConstruction Services in accordance with clause 2A.4.1."
By clause 2A.2.1:
"During the Pre-Construction Period:
1
2
3The Contractor will remain wholly responsible for the carrying out and
completing of the Pre-Construction Services."
By clause 2A.6.2:
"The Contractor in submitting the Contractor's Proposals for the
Contractor's Designed Portion and the Contract Sum Analysis in accordance
with the terms and conditions of this Contract thereby confirms that it is
satisfied that:
.
.4 any of the Works designed by the Contractor will fully comply with the
Statutory Requirements and in accordance with the Employer's Requirements
and this Contract".
By clause 2A.6.3:
"The Contractor shall assume responsibility for the Employer's
Requirements in all respects pursuant to the terms and Conditions of this
Contract".
By clause 2.1.1:
"The Contractor shall carry out and complete the Works in a proper and
workmanlike manner and in compliance with the Contract Documents, the
Construction Phase Plan and other Statutory Requirements, and shall give all
notices required by the Statutory Requirements and the Contractor shall
forthwith supply to the Architect/Contract Administrator copies of all such
notices and of all documentation relating thereto."
By clause 2.3.7:
"The Contractor warrants that the Works when completed shall comply with
the Requisite Consents and Statutory Requirements."
5
By clause 2.29:
"The following are the Relevant Events referred to in clauses 2.27 and
2.28:
.1 Variations and any other matters or instructions which under these
Conditions are to be treated as, or as requiring, a Variation;
...
.6 Any impediment, prevention or default, whether by act or omission,
by the Employer, the Architect/Contractor Administrator, the Quantity
Surveyor or any of the Employer's Persons, except to the extent
caused or contributed to by any default, whether by act or omission of
the Contractor or of any of the Contractor's Persons.
...
.13 force majeure."
By clause 4.24:
"The following are the Relevant Matters:
...
.6 any impediment, prevention or default, whether by act or omission,
by the Employer, the Architect/Contractor Administrator, the Quantity
Surveyor or any of the Employer's Persons, except to the extent
caused or contributed to by any default, whether by act or omission of
the Contractor or of any of the Contractor's Persons."
By clause 5.1:
"The term Variation means:
6
Apart from the references in Annexure 4 which I have quoted above, the Contract
contained no express reference to the obtaining of planning permission or
conservation area consent. The reference at paragraph 1 to the planning condition in
respect to highway and construction management has nothing to do with the issues in
this case and can be ignored. The reference to the other planning conditions "that
require discharging prior to commencement" also seems to me to be of no relevance.
In my view, this refers to certain conditions that had to be discharged prior to the
commencement of work: that is to say that Walter Lilly had to obtain RBKC's
confirmation that the relevant obligations had been met.
Mr Moran relied also on various terms which had been deleted, in particular clause
2.29.7, which provided as follows:
7
Mr Moran relied also on the deletion of clause 2.29.12 from the standard printed
form. This provided that the following was a Relevant Event:
"the exercise after the Base Date by the United Kingdom Government
of any statutory power which directly affects the execution of the
Works."
At paragraph 59.3 of the Defence it is averred that the planning consents that RBKC
could, as a matter of law, require for the execution of the Works prior to the Works
commencing were in place in July 2013. Alternatively, it is pleaded that if the
planning consents in place were in some way inadequate, that was not the result of
any breach of contract by Mr Clin.
The position is further complicated because in the Reply (at paragraph 14) Walter
Lilly asserts that there were various discrepancies between the architect's drawings
showing the extent of the demolition required and other more detailed Contract
Drawings. In any event, Walter Lilly denies that the demolition of the rear elevation
was included in or formed part of the Contractor's Designed Portion.
I suspect that Walter Lilly's real case is that, irrespective of whether the existing
consents covered the scope of the demolition works proposed, RBKC's letter of 17
July 2013 constituted a requirement of a local authority with which Walter Lilly was
contractually bound to comply. This is what is pleaded at paragraph 25.1 of the
Particulars of Claim.
If the true position is that the existing consents did not permit the full extent of the
demolition work shown on the plans to which Walter Lilly was working, then there is
an issue as to whether or not Mr Clin complied with his contractual obligation whatever it was - in relation to the obtaining of appropriate conservation area consent.
However, if the true position is that the existing consents did cover the proposed
demolition work, then Mr Clin cannot have been in breach of any duty in relation to
the obtaining of the necessary consent for the simple reason that it was in fact
obtained. In this scenario, the issue is whether or not the letter of 17 July 2013 was a
requirement of a local authority with which Walter Lilly had to comply
notwithstanding that it was based on a false premise. If the answer to this is yes, then
it may in turn raise the question of what that requirement consisted. With the benefit
of hindsight, it is unfortunate that this important distinction does not emerge very
clearly from the preliminary issues as currently framed.
The authorities
Until recently it appeared to have become clear from the authorities that the process of
implying a term into a contract was just one aspect of the exercise of construing the
contract as a whole: seeAttorney General of Belize v Belize Telecom [2009] 1 WLR
1988, where Lord Hoffmann said:
"17. The question of implication arises when the instrument does not
expressly provide for what is to happen when some event occurs. The most
usual inference in such a case is that nothing is to happen. If the parties had
intended something to happen, the instrument would have said so. Otherwise,
the express provisions of the instrument are to continue to operate undisturbed.
If the event has caused loss to one or other of the parties, the loss lies where it
falls.
18. In some cases, however, the reasonable addressee would understand the
instrument to mean something else. He would consider that the only meaning
consistent with the other provisions of the instrument, read against the relevant
background, is that something is to happen. The event in question is to affect
the rights of the parties. The instrument may not have expressly said so, but
this is what it must mean. In such a case, it is said that the court implies a term
as to what will happen if the event in question occurs. But the implication of
the term is not an addition to the instrument. It only spells out what the
instrument means.
9
"26. I accept that both (i) construing the words which the parties have used
in their contract and (ii) implying terms into the contract, involve determining
the scope and meaning of the contract. However, Lord Hoffmann''s analysis
in Belize Telecom could obscure the fact that construing the words used and
implying additional words are different processes governed by different rules.
27. Of course, it is fair to say that the factors to be taken into account on an
issue of construction, namely the words used in the contract, the surrounding
circumstances known to both parties at the time of the contract, commercial
common sense, and the reasonable reader or reasonable parties, are also taken
into account on an issue of implication. However, that does not mean that the
exercise of implication should be properly classified as part of the exercise of
interpretation, let alone that it should be carried out at the same time as
interpretation. When one is implying a term or a phrase, one is not construing
words, as the words to be implied are ex hypothesi not there to be construed;
and to speak of construing the contract as a whole, including the implied
terms, is not helpful, not least because it begs the question as to what
construction actually means in this context.
28. In most, possibly all, disputes about whether a term should be implied into
a contract, it is only after the process of construing the express words is
complete that the issue of an implied term falls to be considered. Until one has
decided what the parties have expressly agreed, it is difficult to see how one
can set about deciding whether a term should be implied and if so what term.
This appeal is just such a case. Further, given that it is a cardinal rule that no
term can be implied into a contract if it contradicts an express term, it would
seem logically to follow that, until the express terms of a contract have been
construed, it is, at least normally, not sensibly possible to decide whether a
further term should be implied. Having said that, I accept Lord Carnwath''s
point in para 71 to the extent that in some cases it could conceivably be
appropriate to reconsider the interpretation of the express terms of a contract
once one has decided whether to imply a term, but, even if that is right, it does
not alter the fact that the express terms of a contract must be interpreted before
one can consider any question of implication.
29. In any event, the process of implication involves a rather different
exercise from that of construction. As Sir Thomas Bingham trenchantly
explained in Philips at p 481:
""The courts'' usual role in contractual interpretation is, by resolving
ambiguities or reconciling apparent inconsistencies, to attribute the
true meaning to the language in which the parties themselves have
expressed their contract. The implication of contract terms involves a
different and altogether more ambitious undertaking: the interpolation
of terms to deal with matters for which, ex hypothesi, the parties
themselves have made no provision. It is because the implication of
terms is so potentially intrusive that the law imposes strict constraints
on the exercise of this extraordinary power.""
30. It is of some interest to see how implication was dealt with in the recent
case in this court of Aberdeen City Council v Stewart Milne Group Ltd 2012
SLT 205. At para 20, Lord Hope described the implication of a term into the
contract in that case as ""the product of the way I would interpret this
11
contract"". And at para 33, Lord Clarke said that the point at issue should be
resolved ""by holding that such a term should be implied rather than by a
process of interpretation"". He added that ""[t]he result is of course the
same""."
1
Lord Carnwath took a slightly different approach. He started with the Belize
Telecom case on the basis that it represented "the most modern treatment at the
highest level" of the topic (at [58]). He went on to reject emphatically the submission
that it involved any watering down of the traditional tests for the implication of terms
(at [59]), a point with which Lord Clarke agreed (at [77]). Lord Carnwath said that
whilst he accepted that more stringent rules applied to the process of implication, it
could be a useful discipline to remind oneself that "the object remains to discover
what the parties have agreed or (in Lady Hale's words)"must have intended" to
agree" (at [69]).
But I must bear in mind also that the court is concerned only to with ascertain the
objective intention of the parties, it is not to have regard to the private intention of
either party or to imply a term that the court considers to be fair and reasonable. The
search is to find the meaning which it would convey to a reasonable person having all
the background knowledge that the parties to the contract could reasonably be
expected to possess.
Although the court has been referred to other authorities, including extracts from
Keating on Construction Contracts, 9th Edition, in my view those authorities are either
decisions that turn on their own particular facts or are expressions of view
unsupported by any direct authority. In these circumstances I do not find it necessary
or helpful to say any more about them.
The course of the hearing
At the hearing each side called evidence. Walter Lilly called Mr Andrew
Postlethwaite, its construction director. Mr Clin called Mr Satish Patel, a director or
partner of Mr Clin's architects. Their witness statements were exchanged on 7
December 2015. However, on 8 January 2016 Mr Patel produced a supplemental
witness statement in response to the statement by Mr Postlethwaite, which then led to
a further statement by Mr Postlethwaite dated 13 January 2016, some three working
days before the hearing. This provoked a third witness statement from Mr Patel,
which was served the day before the hearing, 18 January 2016. This state of affairs
12
was highly unsatisfactory and gave rise to indignant protests by each side at the
conduct of the other.
1
I have to confess that I did not really understand how this evidence was relevant to the
preliminary issues. Mr Postlethwaite said, as I would have expected him to say, that
Walter Lilly took RBKC's letter of 17 July 2013 very seriously. I would have been
astonished if he had said anything else. He said that Walter Lilly understood that the
effect of the letter was telling Walter Lilly to stop the demolition work.
In this context he was shown an e-mail from RBKC to his firm dated 19 September
2013, the relevant part of which was as follows:
"1. You will provide us with three drawings:
o Drawing 1 will show us the rear elevations of buildings before
any of your files works commence i.e. The buildings in their
"existing" state.
o Drawing 2 was show us the rear elevations of both building
(sic) before any of your clients works commenced but with all
parts of both buildings which have been demolished and which
are to be demolished clearly shaded or coloured so there can be
no misunderstanding about what parts of the buildings are
removed as part of your clients proposals.
o Drawing 3 was shows the rear elevations of both buildings in
their proposed final state following completion of all your
clients works . . ."
The e-mail went on to say that, assuming the drawings were satisfactory, they would
serve the purpose of proving that no further planning permission for the rear elevation
was required and that the demolition proposed was not "substantial". This would
enable RBKC to close the "enforcement case". Mr Patel said that Mr Clin had the
necessary consents. He said that the application made in December 2013 reverted to
the original consent.
An issue was raised by Walter Lilly about the differences between the work for which
planning permission was sought in December 2013 and the original proposals. Walter
Lilly relied on Architect's Instructions ("AIs") that were issued in August and
September 2013 and April 2014. These were said to reflect revisions to the Works
which were the subject of a revised application for planning consent. The argument
based on these AIs was the subject of supplemental skeleton submissions produced by
13
Mr Brannigan. Mr Brannigan suggested that the court should approach this aspect of
the dispute on the basis of assumed facts: (1) that the AIs did change the design in
order to achieve planning permission by reducing the extent of the demolition
proposed or, (2), that they did not. Mr Moran objected to this proposal and I consider
that he was fully justified in doing so. This type of question goes well outside the
scope of the preliminary issues as formulated and I am not prepared to address it.
1
Mr Brannigan sought to argue that "the obligation to halt the Works" amounted to
the imposition by the employer of restrictions on access to the site or working hours,
but I fail to see where this went. In my analysis, if Mr Clin was in breach of an
express or implied term of the Contract in relation to the obtaining of conservation
area consent, with the result that the contractor could not reasonably be expected to
continue with the demolition work, I consider (for the reasons I give below) that
would have amounted to an act of prevention and therefore a Relevant Event under
clause 2.29. I do not understand why the analysis has to be any more sophisticated
than that.
Similarly, Mr Moran made submissions to the effect that the approach of RBKC was
completely misconceived because "substantial demolition" is not a concept that has
any relevance to conservation area consent. I am prepared to accept, without deciding,
that this is correct, but the real issue is whether or not the conservation area consent
sought and given covered the extent of the demolition work shown in the plans that
were currently being used by Walter Lilly. If it did not, then any reasonable contractor
would be expected to stop the demolition work until the issue of consent was
resolved.
I now turn to the preliminary issues. I propose to take them in chronological sequence,
rather than in the sequence set out in the order of 18 December 2015. This involves
taking issues 5.1, 5.2 and 6.1 first.
The issues about obtaining planning permission or conservation area consent
Issues 5.1, 5.2 and 6.1 concern the responsibility for obtaining planning permission or
conservation area consent. For the sake of completeness I should point out that, as
from 1 October 2013, conservation area consent no longer existed as a separate form
of consent and so thereafter conservation matters formed part of the application of the
planning permission. Neither party has suggested that anything turns on this.
Although I have mentioned that, apart from the express references in Annexure 4 to
which I have referred, the Contract contains no express term that imposes on either
party the obligation to obtain planning or conservation area consent, that observation
needs some elaboration.
By clause 2A.6.2 of the Contract (see paragraph 15 above) Walter Lilly confirmed
that any works that it designed would comply with the Statutory Requirements, that is
to say either that such works would comply with existing planning permission or
conservation area consent, or that any necessary consents would be obtained. .[1] In my
view, this clause does not transfer the general risk of obtaining planning permission or
conservation area consent to Walter Lilly, but makes it responsible for obtaining
consent for any work that goes beyond that set out in the Employer's Requirements.
14
One example of this could be temporary works: if, for example, the contractor wished
to demolish a wall in order to gain access to the site with a view to reinstating it later,
the contractor may well be responsible for obtaining any necessary consent to that
demolition. For the purposes of this judgment, I will assume that the demolition
works referred to in RBKC's letter of 17 July 2013 formed part of the Employer's
Requirements. Whether or not that assumption is correct is not a question that I can
decide at this stage on the basis of the material before the court.
1
The reasonable man in the position of the parties would, in my view, have in mind
that, in general, a person who wishes to develop his land will know either that he is
likely to need planning permission or, in the case of a residential development, that he
must satisfy himself that the development proposed is exempt from the requirement
for planning permission. The same applies to conservation area consent where the
property is in a conservation area.
In this case it seems to me to be obvious that the parties must have intended that
someone should have the responsibility for applying for planning permission. This is
not a case where, because nothing is said expressly in the contract, the parties could
have intended that nothing should happen about planning permission: planning
permission had to be obtained in order for the development to go ahead. In addition, it
seems to me that it would be equally obvious to an informed bystander that the party
best placed to obtain planning permission is the employer, not least because he is the
party who knows well in advance what he wants to do. The contractor does not find
that out until he is invited to tender, by which time it may be too late for planning
permission or conservation area consent to be obtained in time. Any reasonable
person would know that a failure to make a timely application for the necessary
permission or consent might well result in delay (unless of course the contractor has
indicated that is prepared to take the risk of carrying out the work without that
permission or consent).
It appears to be common ground that the primary responsibility for applying for
planning permission rests with the employer. The essential point at issue between the
parties is whether a term should be implied to the effect that the employer
will ensure that planning permission is obtained, or whether there should be a more
limited obligation - for example, to exercise reasonable diligence to obtain the
necessary planning permission.
In a slightly different context, it is well accepted that, in the absence of any relevant
express term, there will generally be implied into a construction contract a term that
the employer will give the contractor all necessary information required in good time:
see Hudson's Building and Engineering Contracts, 13th Edition, 3-129. It is not
merely an obligation to take reasonable steps to see that this happens. Similarly, I
consider that in this contract there must be an obligation that, in order to make the
15
contract work effectively, the employer will provide in good time to the local
authority the information that its planning officers require in order to grant the
necessary consents. In fact, that is very similar to the obligation that Mr Clin imposed
on the architect in this case, which was to "make where required application for
planning permission". However, clause 1.12 of the architect's Basic Services, which
contained this obligation, also made it clear that the permission itself was beyond the
architect's control and therefore the architect could not guarantee that permission
would be granted.
1
I should add, for the avoidance of any doubt, that by "information that its planning
officers require" I mean information that those planning officers are lawfully entitled
to expect, not that which they may unreasonably demand.
I therefore agree with Mr Moran that the employer should not be under an absolute
obligation to secure planning permission, essentially for the reason given in the
architect's Basic Services. However, I see no justification for limiting the obligation
to that of taking reasonable steps to obtain planning permission. Whilst it may be
arguable whether or not there is any such limitation on the obligation on the architect
under the Basic Services, there is no such limitation on term usually implied by law
that the employer is to provide information required by the contractor in good time. I
think that the hypothetical reasonable man would say to himself: "of course the
parties cannot expect the contractor to take the sole risk of the employer's architect
not doing his job properly". It is not much comfort to the contractor to be told that
the employer took reasonable steps to engage a competent architect and thereafter
took reasonable steps to chase him to do what he was required to do if in the end the
architect failed to make the necessary application in time.
However, by analogy with other situations, there is nothing inequitable about leaving
the loss caused by the unreasonable actions of a third party, the third party in this case
being the local authority, to lie where they fall: see Porter v Tottenham UDC [1915] 1
KB 776 (where a third party unreasonably and wrongfully threatened to sue to prevent
the contractor from using an access road). It seems to me that commercial necessity
does not require the employer to undertake the entire risk of the vagaries of obtaining
planning permission. Imposing such an obligation on the employer will not
necessarily make the contract work because it cannot prevent a local authority from
behaving unreasonably or capriciously. If the necessary planning permission has not
been obtained at the time when the contractor puts in his tender, he must decide
whether or not to accept the risk that planning permission might not be granted. It is,
after all, always open to him to protect his position by stipulating for an appropriate
term.
But a corollary of this is that, as part of Walter Lilly's implied obligation to cooperate
with Mr Clin, I consider that it would be required to provide to Mr Clin (or to his
architects) in due time any necessary information which only Walter Lilly was in a
position to provide in order to enable Mr Clin (or his architects) to make any
applications for conservation area consent in accordance with the implied term.
Issues 5.1.2 and 6.1 raise the question of whether or not Mr Clin was required to
satisfy himself, prior to commencement of the Works, that RBKC was satisfied that
all necessary consents and approvals for the Works had been obtained. I am unable to
16
see why such a term is necessary in order to make the contract work. By the time that
the works are due to start the contractor will already have committed himself to
carrying them out during the agreed period. Suppose that, shortly before the works are
due to begin, the employer asks the local authority whether or not it is satisfied that all
necessary consents have been obtained. If, mistakenly, some officer of the local
authority says yes, then what is to happen? If in truth there is no consent, then the
work cannot lawfully proceed. For the reasons that I have already given I can see no
basis on which the risk of that eventuality should lie solely with the employer.
Alternatively, if the local authority responds by saying that the relevant consents have
not been obtained, but is again mistaken, then what is to happen? Again, it seems to
me that business efficacy does not dictate that it should be the employer who takes the
sole risk of that mistake. The same considerations would apply if it were the
contractor who made the enquiry and received the wrong answer. In my view this is a
classic case where, the contract having made no relevant provision, no intention to
have such a provision should be imputed to the parties.
1
Accordingly, for the reasons that I have given above my answer to each of issues 5.1.1
and 5.2 is No. The obligation to be implied into the Contract is the one that I have set
out at paragraph 58 above. But for the reasons that I have given in the previous
paragraph, my answers to issues 5.1.2 and 6.1 are also No.
Issue 4
But for the reasons that I have already given, the information which Mr Clin had to
provide was that which was reasonably necessary for the planning officers to make
their decision. If he provided such information in good time, both initially and then
subsequently, in response to any reasonable requests, then he would have discharged
the duty.
As I have already said, I can see no justification for imposing on either party sole
responsibility for the consequences of capricious conduct by the local authority. For
the contract to work it is not necessary that either Mr Clin or Walter Lilly alone
should bear that risk. In my view the contract can work just as well if that risk is left
to lie where it falls. It is, I think, a situation where, since the contract has not provided
how the risk should be borne, no provision should be made: see Belize Telecom, at
[17].
17
have been an obligation on Walter Lilly to obtain conservation area consent (or to
provide any information required in order that such consent could be obtained).
1
Accordingly, but subject to the caveats in the previous paragraph, my answer to issue
4 is No.
Issues 1-3: RBKC's letter of 17 July 2013
. . ."
1
In my view, this letter is saying three things. The first is that the proposed demolition
as shown on the plans seen on site (in other words those to which Walter Lilly was
working) does not have conservation area consent, and that such consent is required.
Second, if it is intended to proceed with the demolition works shown in those plans,
then an appropriate application for conservation area consent must be made (which
the writer would wish to receive within 28 days). Third, if the works proceed without
the necessary consent RBKC will consider prosecution.
It is, I think, implicit in the final paragraph in the passage quoted above, that
prosecution will be considered only if (a) the demolition work proceeds and (b) it
continues beyond the extent of demolition permitted by the existing consent. I do not
know how much further demolition work remained to be carried out that was covered
by the existing conservation area consent, but it may have been the case that further
demolition within the scope of the existing conservation area consent could be carried
out without attracting any sanction. Indeed, it may be that all the proposed demolition
work was within the scope of the existing conservation area consent - that is an issue
that I cannot resolve.
If there was no breach of the implied term by Mr Clin, then in my judgment he cannot
be liable for any acts of RBKC, whether that conduct consists of wrongly denying the
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If, in addition, there was no failure by Walter Lilly to provide information to the
architect, then any loss resulting from the wrongful or capricious conduct by RBKC
must lie where it falls.
In relation to issue 6.3, I decline to answer the question. On the material before the
court to do so would be to indulge in speculation. Indeed, Walter Lilly's own case
appears to be that the appropriate course would have been to issue a prompt
application for appropriate conservation area consent (or, if time did not permit,
planning permission).
The former paragraph 3.3 of Walter Lilly's proposed preliminary issues
Since I have not found that there was an instruction to halt the Works, this issue does
not arise. Even if it did, I would refuse permission to Walter Lilly to reinstate it
because I am unpersuaded that it makes any useful contribution.
After note
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I have to confess that I had some misgivings when I made the order of 18 December
2015. However, I was prepared to assume that the parties probably knew what would
best advance the litigation. With the benefit of hindsight I consider that the order may
not have been a wise one.
I think part of the difficulty is that the parties have been working on the basis that one
or other side's approach must be right. That, I think, was a mistake. Rightly or
wrongly, I have concluded that the correct formulation of the implied term is not one
for which either side contended. This has meant that some of the other issues do not
permit of a ready answer. I have done my best to deal with this by explaining my
approach to the problem and then setting out the reasons for my conclusions.
Another and really more fundamental difficulty lies in the attempt to determine issues
of principle without having established the underlying facts: in particular, in precisely
what respects the work shown on the site plans fell outside the existing conservation
area consent (if indeed it did). I have generally assumed that it was work within the
scope of the Employer's Requirements for which the responsibility for applying for
the necessary consent rested on Mr Clin, but in the absence of detailed findings of fact
this has not been established. The result is that this judgment may prove to be of
limited assistance to the parties.
Following the issue of this judgment in draft the parties may, if they wish, have an
opportunity to address me further on the issues if either party (or both of them)
considers that it has not had a proper opportunity to put its case on the other issues in
the light of my conclusion about the implied term.
In any event, I will if necessary hear counsel on the appropriate form of relief and any
questions of costs if these cannot be agreed.
Note 1 It seems to me that the wording of clause 2A.6.2 is wide enough to include the situation where the
contractor submits proposals that he knows are not covered by the existing consent(s) but is confident that the
necessary consent can be obtained (will fully comply . . . will fully comply . . . ). [Back]
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